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Does a Negative Balance Hurt Your Credit Score?

Receiving a credit card statement usually raises feelings of dread. The most common worry is, “how much did I spend?” Sometimes, however, credit card statements come with a “-“ next to the current balance. This is known as a “negative balance.”  But what does that mean, and does a negative balance hurt your credit score?

What Is a Negative Balance?

In most instances, a negative balance is a bad thing. After all, negative doesn’t sound too positive, does it? A negative balance with a credit card, however, is not so bad, after all. A negative balance simply means your lender owes you money – not the other way around.

When you use your credit card to make payments, you end up with a positive balance. This means that you owe the bank money for the purchases you made. But if you pay too much on that balance, you may overpay, leading to a credit on your account.

Most credit card companies try to prevent negative balances, with online payments playing a significant role in this effort. Overpayment still occurs sometimes, however. Beyond overpaying, statement credits are another common reason for a negative balance.

Does a Negative Balance Harm Your Credit Score?

A negative balance on your credit card will not hurt your credit score. Your score will experience the same benefits as having a balance of zero. That said, you probably want to avoid this scenario, as it might mean less money in your bank account for other purchases or bills.

What Happens When Your Credit Card Company Owes You money?

If your credit card balance is negative, there are several scenarios for what happens to that money. These include:

  • Cover for future purchases: If you have a $25 credit, for example, and make $50 in purchases, your next statement might be for $25.
  • Deposits into bank accounts: Your issuer may deposit the additional funds into an associated bank account, with advance notice.
  • Check: Your issuer may send you a check. This is likely the case after months of inactivity on the account.

The exact nature of the rebate depends on the issuer. Many banks will only provide a cash refund if they are contacted by phone, for instance. Ultimately, however, your money will find its way back to you.

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About: Cory

Cory is BestCards.com's "Jack of all trades" and resident rewards expert, covering all facets of the points game – especially travel, hotels, and airlines. In addition to credit cards, Cory finds that jogging, cats, and memes are essential parts of a balanced day.